[Peace-discuss] banking bailouts *are* protectionism! from another fine Dean Baker article

[Stuart Levy]

We keep hearing from financial pundits & politicians
about the need to avoid falling into the sink of
protectionism.  Keep our markets free, etc.   

But Dean Baker's recent article points out that our
bank bailouts -- which guarantee the stability of US and
European banks, making them as safe as their governments --
is exactly that, protectionism, and it puts the banks of
other countries at an enormous competitive disadvantage:

    http://www.truthout.org/111008D
    "The G-20 and Biological Warfare", by Dean Baker


[...]

 The G-20 will no doubt decide to make some aid, presumably through the
International Monetary Fund, available to the countries being hit by the
fallout from Wall Street's financial meltdown. But this aid will come with
strings and likely not be sufficient to make these countries whole.

    There is no easy remedy to this situation. But it should be obvious to the
developing world that the only way that they can protect themselves from the
episodic crises created by the rich countries is to have alternative poles of
financial support. Specifically, if they can establish regional funds, as the
South American countries have begun to do with the Bank of the South, then they
can hope to insulate themselves from the financial dealings and misdealing of
the wealthy countries.

    Building up regional funds will not be easy. Countries will have to make
compromises and surrender some control to allow a regional fund to operate
effectively. In addition, the wealthy countries will go to considerable lengths
to prevent the creation of effective regional funds. The most obvious route
will be to invite a few important actors in the developing world to sit among
the wealthy countries as junior partners.

    These tactics may prove successful. However, until the developing countries
can turn to alternative sources of capital, they will be susceptible to every
crisis resulting from the regulatory failures of the wealthy countries, even if
they had been completely responsible in managing their own financial affairs.
It's not fair, but that is the way the world works.